Consumables, drugs to see slower market growth in 2013, study finds

Guggenheim Securities predicts "outperforming" retail pharmacy sector

NEW YORK -- Growth in the consumer products market is likely to slow down over the next five years, while pharmacy retailers will see a profit windfall due to the generic drug cycle, according to a new report.

The report, from Guggenheim Securities, found that the $1.8 trillion market for consumables -- which the firm uses to describe goods like foods, beverages, drugs and other medical products -- will grow by 3-3.5%, compared with 4.5% over the prior two decades, due to a combination of economics and demographics. At the same time, consumer interest in a "value and convenience" model was driving market share to low-cost retailers like Costco, Kroger, Dollar General, Family Dollar and Five Below.

In particular, food and beverages grew by 0.5% in November 2012, compared with 3.5% in the first half of 2012, while drugs and other medical products grew by 3.2%, down from 4.7% in the first half of 2012.

Overall, the report said, retailers whose competitive positioning allows them to suffer less will fare better price-wise, while those that don't require a healthy top line to succeed, such as drug stores, will outperform. Guggenheim issued "Buy" ratings for the stock of Dollar General, Family Dollar, CVS, Walgreens, Rite Aid, Kroger and Five Below.

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